Which is more compelling pick right now? – HighPoint Resources Corporation (HPR), Callaway Golf Company (ELY)

The shares of HighPoint Resources Corporation have increased by more than 25.93% this year alone. The shares recently went up by 0.78% or $0.05 and now trades at $6.46. The shares of Callaway Golf Company (NYSE:ELY), has jumped by 33.45% year to date as of 07/12/2018. The shares currently trade at $18.59 and have been able to report a change of -2.92% over the past one week.

The stock of HighPoint Resources Corporation and Callaway Golf Company were two of the most active stocks on Thursday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Next 5Y EPS Growth: 31.00% versus 30.90%

When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that HPR will grow it’s earning at a 31.00% annual rate in the next 5 years. This is in contrast to ELY which will have a positive growth at a 30.90% annual rate. This means that the higher growth rate of HPR implies a greater potential for capital appreciation over the years.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. HPR has an EBITDA margin of 35.9%, this implies that the underlying business of HPR is more profitable. The ROI of HPR is -6.00% while that of ELY is 8.00%. These figures suggest that ELY ventures generate a higher ROI than that of HPR.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, HPR’s free cash flow per share is a negative -0.05, while that of ELY is also a negative -10.98.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for HPR is 1.20 and that of ELY is 1.50. This implies that it is easier for HPR to cover its immediate obligations over the next 12 months than ELY. The debt ratio of HPR is 0.58 compared to 0.28 for ELY. HPR can be able to settle its long-term debts and thus is a lower financial risk than ELY.


HPR currently trades at a forward P/E of 9.05, a P/B of 0.75, and a P/S of 4.65 while ELY trades at a forward P/E of 20.98, a P/B of 2.57, and a P/S of 1.54. This means that looking at the earnings, book values and sales basis, HPR is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of HPR is currently at a -25.83% to its one-year price target of 8.71. Looking at its rival pricing, ELY is at a -6.77% relative to its price target of 19.94.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), HPR is given a 2.00 while 2.20 placed for ELY. This means that analysts are more bullish on the outlook for ELY stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for HPR is 6.06 while that of ELY is just 7.83. This means that analysts are more bullish on the forecast for HPR stock.


The stock of Callaway Golf Company defeats that of HighPoint Resources Corporation when the two are compared, with ELY taking 5 out of the total factors that were been considered. ELY happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, ELY is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for ELY is better on when it is viewed on short interest.

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